Why is the Japanese yen weak?

The yen has weakened far more than expected, even though the economy and stocks are looking much healthier

Luxury Shopping Streets with Neon Signs, Ginza Avenues Lined with Shops of Expensive Brands in the Heart of Tokyo, Japan
(Image credit: Marco Ferrarin)

Markets rarely leave you in doubt that you’ve got something very wrong and the yen has been an outstanding example of that over the past couple of years. The Japanese currency has slumped against almost every other country, even as the stock market has been hitting new highs and the economy has been looking more promising than it has for a very long time. 

Against the US dollar, the yen has gone back to where it was in the 1980s when a prolonged period of across-the-board dollar strength and tensions over the growing US trade deficit led to the Plaza Accord agreement. This has taken almost everybody by surprise. No analysts forecast such extreme weakness and most have been expecting the yen to stabilise and rise at every point along the way. 

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.